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Laissez-faire vs. Planned Economy

Although the history clearly shows the inconsistency of the methods used in planned economy with real life and catastrophic long- and short-term results they have when applied, not only the ignorant masses, but also the people who are in charge of governments seem to be more and more inclined to it in the latter years. It is natural for government officials to be willing to increase their control over the business, but not less frightening all the same.

The main reason for the effectiveness of laissez-faire capitalism is not even freedom, but the unrivalled credibility of information. For example, the law of supply and demand in the conditions of laissez-faire that is uncorrupted by any kind of governmental intervention turn directly into the law of cause and effect. If the prices on some commodity start to grow quickly, it means that, due to some reason, the supply of this commodity began to reduce and the sellers react accordingly. In the case of planned economy, the price on the commodity is set and cannot be changed; and in case there is a shortage, the commodity is bought not by the one who is ready to pay most, but by the one who manages to do it first; it is the same discrimination, only after a different method.

It is only one example, but the same goes for any other segment of economy. The economic relationships tend to adjust themselves just fine when there is no interference with them. Once the government starts to impose the rules, the distraction appears that disrupts the flow of information and makes feedback for people more difficult.